Insurance Contracts

Due process steps

Stage 5: Current stage

StepRequired/
OptionalMetrics or
evidenceProtocol for and evidence
provided to DPOCActions

Board meetings held in public, with papers available for observers. All decisions are made in public session.

Required

Meetings held to discuss topic

Project Website contains a full description with up-to-date information on the project

Meeting papers posted in a timely fashion

Members of the IASB discuss with DPOC progress on major projects, in relation to the due process being conducted

DPOC reviews comments from interested parties on IASB due process as appropriate

Board meetings

The IASB discussed the project at every meeting between December 2010 and February 2013.

Project website

The project website contains a full description with up-to-date information on the project. In addition to the standard posting of papers, decision summaries and Board meeting webcasts, this has included regularly updated material as follows:

A high level summary of progress on the project, describing the main IASB decisions;

A high level comparison of the IASB’s tentative decisions with the proposals in the 2010 Exposure Draft;

A detailed summary of the IASB’s decisions, which shows how each paragraph in the 2010 Exposure Draft would be affected by the decisions taken each month;

A 10-15 minute podcast that summarises the insurance contracts meetings for each month and places those decisions in context; and

Topic reports on the IASB’s decisions and working drafts.

DPOC

The Due Process Oversight Committee (DPOC) was informed of progress on the project in March 2011, June 2011, July 2011, October 2011, April 2012 and September 2012. In addition, in January 2012, the Due Process Oversight Committee was informed about correspondence with the HUB Global Insurance Group regarding the accounting for short-duration insurance contracts.

Consultation with the Trustees and the IFRS Advisory Council

Required

Discussions with the IFRS Advisory Council on topic

DPOC meets with the Advisory Council to understand perspectives of stakeholders on due process of IASB

Advisory Council Chair invited to Trustees’ meetings and meetings of DPOC

IASB members discussed the project with the Advisory Council in November 2007 and October 2011. Education sessions were also held for Advisory Council members in February 2010 and October 2010.

The IASB’s September 2012 discussions on due process were reported to the Trustees in October 2012.

Consultative groups utilised, if formed

Optional

Extent of consultative group meetings, and evidence of substantive involvement in issues

Consultative group review of draft Exposure Draft

DPOC receives report of consultative group activity from IASB

Since the end of the comment period, the IASB has consulted with the Insurance Working Group in November 2010, March 2011, May 2011, October 2011 and June 2012, meeting for a total of 6.5 days. The working group papers covered the all aspects of the proposed IFRS including scope, unbundling, recognition, contract boundary, cash flows, discount rate, risk adjustment, residual margin, participating contracts, reinsurance assets, premium allocation approach, disaggregation and volume information, OCI, disclosures and transition.

In October 2012, the staff provided the DPOC with a copy of the analysis of due process steps provided to the IASB. That analysis included a description of the use of consultative group activities.

Fieldwork undertaken in analysing proposals

Optional

IASB describes approach taken on fieldwork

IASB explains why it does not believe fieldwork is warranted, if that is the preferred path

Extent of field tests

DPOC to review the IASB’s explanation if fieldwork is deemed by IASB as not required and have the opportunity to discuss the explanation with IASB

DPOC receives a report on fieldwork activities and how findings have been taken into consideration by IASB

The IASB has conducted field work in 2001/2002, in 2009 and in 2010/2011.

2001/2002: field visits to 19 insurance companies from nine countries, to assess the practical implications of implementing the model proposed in the DSOP (on which the proposed IFRS is largely based)

2009: targeted field tests by sixteen insurers, based in Asian, Australian, European and North American markets and with life, non-life and reinsurance businesses, to better understand some aspects of the practical application of the proposed insurance model.

2010/2011: targeted field tests, involving fifteen insurers, based in Asian, Australian, European and North American markets and with life, non-life and reinsurance businesses, to test the proposals in the ED in order to understand how the proposed approach would operate in practice, identify where more detailed implementation guidance may be required, evaluate the costs and benefits of the proposed approach and assess how the proposed approach will help insurers to communicate with users of their financial statements.

In October 2012, the staff provided the DPOC with a copy of the analysis of due process steps provided to the IASB. That analysis included a description of the fieldwork undertaken in analysing proposals.

Outreach meetings with a broad range of stakeholders, with special effort for investors

Optional

Extent of meetings held and location

Evidence of specific targeted efforts for investors

DPOC receives a report on outreach activities and IASB reviews with DPOC outreach plan for the ED and its approach to the optional steps to ensure extensive outreach and public consultation

IASB members and staff have, throughout the process:

held over 400 meetings with individuals and groups of preparers, users, actuaries, auditors, regulators and others in order to test proposals and to understand concerns raised by affected parties since the ED was published;

appeared at many public events to exchange views with constituents;

maintained a regular and active dialogue with regulators, standard setters and industry representative groups; and

obtained the views of users of financial statements through targeted meetings and attendance at user forums in the US, Europe and Asia.

In October 2012, the staff provided the DPOC with a copy of the analysis of due process steps provided to the IASB. That analysis included a description of the use of outreach meetings with a broad range of stakeholders, including the IASB’s efforts to obtain feedback from investors.

Webcasts and podcasts to provide interested parties with high level updates or other useful information about specific projects.

Optional

Extent of and participation in Webcasts

DPOC receives a report on outreach activities

Staff and IASB members have recorded 17 podcasts since the end of the 2010 Exposure Draft period and presented four webcasts.

The webcasts introduced the 2010 Exposure Draft and discussed the accounting for reinsurance contracts. The podcasts summarise the insurance contracts meetings for each month and place those decisions in context.

In October 2012, the staff provided the DPOC with a copy of the analysis of due process steps provided to the IASB. That analysis included a description of the use of webcasts and podcasts to provide interested parties with high level updates or other useful information about specific projects.

Public discussions with representative groups.

Optional

Extent of discussions held

DPOC receives a report on outreach activities

The staff think that the public round tables and insurance working group meetings, together with discussions with representative groups in private meeting, make it unnecessary to hold public discussions with representative groups.

Online survey to generate evidence in support of or against a particular approach.

Optional

Extent and results of surveys

DPOC receives a report on outreach activities

The public round tables and insurance working group meetings, together with discussions with representative groups in private meetings, make this step unnecessary.

In October 2012, the staff provided the DPOC with a copy of the analysis of due process steps provided to the IASB. That analysis included a description of the use of public roundtables, insurance working group meetings and discussions with representative groups in private meetings, all of which supplant the use of online surveys.

This step overlaps with the round table meetings, which were organised in conjunction with the Accounting Standards Board of Japan and the US standard-setter, the Financial Accounting Standards Board. In addition, staff and IASB members have presented at regional discussion forums in Europe, South Africa and Canada, and with the AOSSG.

In October 2012, the staff provided the DPOC with a copy of the analysis of due process steps provided to the IASB. That analysis included a description of the use of regional discussion forums.

Round-tables between external participants and members of the IASB.

Optional

Extent of meetings held

DPOC receives a report on outreach activities

In December 2010, after the publication of the ED, the IASB conducted six public round-table meetings in Japan, the USA and London. These were attended by 94 participants from 81 organisations in 9 countries, representing a wide variety of constituents (including users, preparers, auditors and others).

Updates on this project were included in regular reports to the DPOC. In October 2012, the staff provided the DPOC with a copy of the analysis of due process steps provided to the IASB. That analysis included a description of the use of round-tables between external participants and members of the IASB.

Analysis of likely effects of the forthcoming IFRS or major amendment, for example, costs or ongoing associated costs.

Required

Publication of effect analysis as part of basis for conclusions

IASB reviews with DPOC results of effect analysis and how it has considered such findings in proposed IFRS

IASB provides a copy of the effect analysis to the DPOC at the point of standard’s publication

Updates on this project were included in regular reports to the DPOC, and a summary of due process was reported to the Trustees at the Trustees’ meeting in October 2012.

The IASB has paid particular attention to the effect the proposals would have on the volatility of reported results. The IASB plans to include an analysis of likely effects in the Basis for Conclusions to the forthcoming revised Exposure Draft. A preliminary effects analysis was provided to the Board in September 2012 and the IASB plans to provide a copy of the effect analysis to the DPOC in due course.

Finalisation:

Due process steps reviewed by IASB

Required

Summary of all due process steps discussed by the Board before an IFRS is issued

DPOC receives summary report on due process steps before an Exposure Draft is issued

In October 2012, the staff provided the DPOC with a copy of the analysis of due process steps provided to the IASB.

Exposure Draft has appropriate comment period.

Required

IASB sets comment period for response

DPOC receives notice of any change in comment period length and approval if required

The revised Exposure Draft has a comment period of 127 days (up to 25 October 2013).

Drafting:

Drafting quality assurance steps are adequate

Required

Translations team included in review process

DPOC receives summary report on due process steps followed before an Exposure Draft is issued

The translation team reviewed a pre-ballot draft of the revised Exposure Draft.

Drafting quality assurance steps are adequate

Required

XBRL team included in review process

DPOC receives summary report on due process steps followed before an Exposure Draft is issued

The XBRL team reviewed the pre-ballot of the revised Exposure Draft.

Drafting quality assurance steps are adequate

Optional

External reviewers used to review drafts for editorial review and comments collected and considered by the IASB

DPOC receives summary report on due process steps followed before an Exposure Draft is issued, including the extent to which external reviewers have been used in the drafting process

The IASB invited members of the Insurance Working Group and others to participate in a review of the revised Exposure Draft. Twenty two individual participants took part in the review.

Drafting quality assurance steps are adequate

Optional

Drafts for editorial review made available to members of IFASS and comments collected and considered by the IASB

DPOC receives summary report on due process steps followed before an Exposure Draft is issued

The staff intends to place the revised Exposure Draft on the IFASS website so that members of IFASS may comment on the targeted proposals.

Drafting quality assurance steps are adequate

Optional

Review draft posted on project website

DPOC receives summary report on due process steps followed before an Exposure Draft is issued

Because this is a revised Exposure Draft, the staff do not plan to post a review draft on the project website. The staff observe that they have shared drafting of some sections of the revised Exposure Draft with the Insurance Working Group and placed topic reports that include that proposed drafting on the project website as the project has progressed.

Publication:

Exposure Draft published

Required

Exposure Draft posted on IASB website

DPOC informed of the release of the Exposure Draft

The IASB published the revised Exposure Draft on 20 June 2013.

Press release to announce publication of Exposure Draft.

Required

Press release published

Media coverage

DPOC informed of the release of the Exposure Draft

A press release announcing the publication of the revised Exposure Draft was issued on 20 June 2013.

Snapshot document to explain the rationale and basic concepts included in the Exposure Draft.

Optional

Snapshot posted on IASB Website

DPOC receives a report on outreach activities
Snapshot sent to DPOC members